Sanford FY profit falls 6.7% on charges; sales growth stalls

Nov. 28 (BusinessDesk) - Sanford, the country's
second-biggest fishing company by sales, fell 6.7 percent
after it took charges on restructuring its Coromandel mussel
farm and legal fees for its unsuccessful defence of claims
it dumped waste oil off American Samoa.

Net profit fell
to $20.9 million, or 22.3 cents per share, in the 12 months
ended Sept. 30, from $22.3 million, or 23.8 cents, a year
earlier, the Auckland-based company said in a statement.
That included a $2.6 million writedown on its North Island
Mussel Processors investment and a provision of up to $5
million in legal fees and fines in the US Department of
Justice prosecution. Sentencing is scheduled in January next
year.

The result met Sanford's October guidance, when the
fishing company downgraded its annual earnings expectations
to between $20 million and $21 million having previously
signalled an improved second half. Its Pacific tuna
operation was hit by a lack of fishing time from two of its
three vessels, one of which was detained due to the US
prosecution and the other needing an upgrade.

"Events of
the past year neutralised our expectation of improved
returns this year," managing director Eric Barratt said in
his commentary. "We have outlined the impact of those events
and believe that we can continue to be positive about
prospects in the coming year."

The shares fell 1.1
percent to $4.40 in trading today, and have gained 8.8
percent this year. The stock is rated an average 'hold'
based on four analyst recommendations compiled by Reuters,
with a median target price of $4.86.

Sanford's revenue
slipped 0.9 percent to $460 million in the year, with
smaller contributions from markets in Australia, Europe and
North America while sales into Asia picked up across the
board. The company fattened its gross margin to 18 percent
from 16 percent a year earlier.

Barratt said both local
and export markets were firmer for inshore fish species,
though the strong currency "continues to be a challenge."
Deepwater operations were the main contributor to earnings.

"The inshore and deepwater operations are expected to
continue to provide strong contributions through ongoing
focus in business improvement and increased catching
efficiency," he said.

The board declared a final dividend
of 14 cents per share, taking the annual payment to 23
cents.

The Wellington-based BusinessDesk team led by former Bloomberg Asian top editor Jonathan Underhill and Qantas Award-winning journalist and commentator Pattrick Smellie provides a daily news feed for a serious business audience.

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